TMS Ep240: Bank deposit rates, chip shortage, FD rates, Electricity Bill

From State Bank of India to Bank of Baroda, banks are rushing to woo depositors with attractive rates. And these deposit rates may soar further as most economists believe that the repo rate will rise to 5.75-6 per cent by the end of this calendar year. So what is in the store for investors?

Pandemic and subsequent supply chain disruption has not just pushed inflation, it also led to shortage of semiconductor chips. Mercedes CEO Ola Kaellenius recently said that the shortage of these chips will last throughout this year and into 2023. And now, the face-off between China and Taiwan is threatening to make the matter worse. 

Zhao Haijun, the chief of China’s top chipmaker SMIC, last week said that rising geopolitical tension and high inflation are adding to industry “panic”. In India too, the central bank is on a fire fighting mode. It has been raising key rates to bring down inflation. Which, in turn, is making banks jack up their deposit rates to fund loan demand. Will these rate hikes lure equity investors to safer bank assets?

From the markets, let us turn our focus to a bill through which the government wanted to usher in what it called “much-needed reforms” in the power distribution sector. But the Electricity (Amendment) Bill 2022 met with stiff resistance. Listen this episode of the podcast to know both sides of the debate.